Causal Relationship between Foreign Capital Inflows and Economic Growth: Empirical Evidence from India

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Author	Narayan Sethi
ISSN	2225-7217
On Pages	65-69
Volume No.	2
Issue No.	1
Issue Date	March 01, 2020
Publishing Date	March 01, 2020
Keywords	Private Foreign Capital Inflows, Macroeconomic Variable, Vector Autoregression (VAR), India

Abstract

The present study attempts to examine the casual relationship between foreign capital inflows and economic growth in India. Using the pair-wise Granger causality test (1969), this paper specifically examines casual relationship between foreign capital inflows and economic growth in India. The important observations emerge from pair-wise Granger causality test which shows there is the long-run equilibrium relationship is restored between the following pairs of variables viz., economic growth and Foreign Direct Investment (FDI), economic growth and Foreign Portfolio Investment (FPI).

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